Rants and musings about things political, philosophical, and religious.

What Internet Taxes and Gay Marriage Have in Common—And Why Both Are a Bad Idea

One of the many troubling bills proposed in the Utah legislature this past session was one which would impose sales taxes on a variety of online and out of state businesses which do not currently collect them. Senate Bill 226, titled “Sales and Use Tax Amendments,” would have brought an estimated half million dollars into state coffers each year.

Though the bill ultimately failed, it passed out of the Senate committee meeting unanimously and then passed the entire Senate. Lobbyists were out in force, using some rather compelling arguments to convince legislators to support the bill. Those arguments have likewise been used to encourage the alteration of marriage law in America to apply to homosexuals. Both issues are a bad idea.

Requiring the collection of sales taxes by online merchants is positioned by proponents as an issue of equality and fairness. We are told that it is unfair to require brick-and-mortar stores to add taxes to their customer’s orders while their online, out-of-state competitors do not. Applying the same requirement to the latter group would be, we are told, the proper way to ensure all are taxed equally. A recent news article on the topic further clarifies:

Online sales taxes are not new, but thus far, Internet retailers have been exempt from collecting it, much to the chagrin of their brick-and-mortar peers who enjoy no such exemption. Customers who shop online are supposed to pay the sales tax directly to the government, but many don’t realize this, so it goes uncollected.

Traditional retailers have lobbied strongly for the bill, because they say it would level the playing field, and state governments are backing it because they realize the revenues such taxes would bring in.

But opponents argue that states should not have the power to dictate to businesses outside of their jurisdiction, and that such taxes would pose a major crimp on Internet sales.

While equality before the law is an effective argument, as is the case that taxes are being required discriminately, one must pause to consider the proper solution to a situation such as this. Retail stores are required by the state to become tax collectors, and online stores with no physical presence in the state are not. Should the state then increase its size, reach, and tax base in the name of fairness?

Absolutely not. Equality before and non-discrimination by the law is important, to be sure. But increasing the size and scope of the state is not the proper method to fulfill that objective. As is usually the case, the opposite is true; reducing and ultimately removing the other barrier is best. Because sales taxes are an illegitimate imposition into a private commercial transaction, political pressure should be applied to repeal that mandate from existing establishments, rather than shackling those that are currently exempt.

The same situation exists in the debate over same-sex marriage. Proponents of altering marriage law in the states and at the federal level claim that prohibitions against gay marriage are unfair and discriminatory. They claim that equality before the law demands that their relationships likewise be licensed and sanctioned by the state.

As with sales taxes, the state should not be enlarged in pursuit of equality in marriage licensure. Because the government has no business being involved in marriage, the discrimination inherent in existing marriage law is best remedied by removing it altogether, or at least reducing the inequality by removing tax credits, estate planning benefits, and other incentives currently restricted to heterosexual couples whose unions are licensed by the state.

When the state is wrongfully imposing mandates on a select class of citizens, it stands to reason that we should oppose attempts to broaden its reach. That illegitimate mandate should be fought and reduced, not openly sought after by some in the name of equality. It’s like suggesting in a bygone era that free black people should have been captured and enslaved, because after all, it wouldn’t be fair to their countrymen in captivity to not see them similarly yoked. Instead, we should be finding ways to break more people free from bondage.

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About the Author

Connor Boyack is president of Libertas Institute, a public policy think tank in Utah. He is the author of several books along with hundreds of columns and articles championing individual liberty. Connor's work has been publicly praised by national figures such as Ron Paul, Judge Andrew Napolitano, Tom Woods, and many others.

11 Responses to “What Internet Taxes and Gay Marriage Have in Common—And Why Both Are a Bad Idea”

Connor,
Thats definately a new take on the topic. The usual rhetoric against gay marriage centers around tradition, and what their religion says about the issue. Secondary arguements to religion and tradition center around the reproductive ability of the couple in question. Opponents of same sex marriage in general seem to prefer the law as it was prior to the debate, even if there is inherent inequality. Perhaps some even support the current law because of the apparent inequality.

It is a leap to compare tax ‘equality’ with inherent human value and equality. I am not sure how many people want to be liberated from current marriage regulations. Opponents of same sex marriage do not seek to liberate heterosexuals from marriage regulation, certainly not the benefits.

The opponents certainly did not seek this in supporting proposition 8 or DOMA. They did not want to extend the title of marriage to be more inclusive, or update the sense of marriage to match modernity.

Most people would rather not pay more when buying something online, or have their business hurt by additional taxes. I don’t equate this issue with marriage or slavery.

I would love to see the sales tax properly applied. Right now, sales tax is being collected and paid to the states by many businesses that have no business collecting and paying it. It comes down to a fundamental misunderstanding of the true nature of the sales tax. Sales tax is an EXCISE tax which means that it is a tax upon the exercise of a government granted PRIVILEGE. What is the privilege being taxes? It is the privilege of selling goods and services at RETAIL. This word does not mean what people think it means. There is absolutely ZERO privilege for a citizen of the United States to buy and sell goods or services. There is also zero privilege for a corporation to buy and sell goods and services within the State in which they are incorporated. There IS, however a privilege involved, for a corporation incorporated within one State to sell goods or services in another State, if they have a ‘brick-and-mortar’ presence. And THIS is exactly what selling at retail means.

Sales tax is not a guaranteed right for a state. Just because a state needs revenue to pay for its costly programs does not mean it has a right to tax an out of state sale.

In state sales can at least be justified by the fact that the business is setup within a state and receiving various state benefits.

But when Amazon ships me a package, the only thing Utah has done to facilitate the sale has already been taxed (from phone lines to electricity to roads, etc).

Additionally, states have no obligation to make sure businesses are on a level playing field (a frequent justification for online tax).

Regarding the issue of marriage, unfortunately you’re wrong on this one. This kind of logic is filled with the hubris of assuming that you know all the variables. You don’t. Families are crucial for society. To suggest that because families are also important in religion and therefore require no state involvement is short sighted. If something is crucial for a society to operate well, it makes sense that society has some determination in how it recognizes those relationships.

Note, I’m not saying society can determine who can engage in what kind of behavior. Getting married isn’t a behavior. But it’s a legal recognition that our government affirms to certain kinds of relationships because we the people recognize it as providing a stable foundation for future generations.

Gay people, polygamous, etc people can do what they want (as much as we might disagree with their behavior). But they do not have a right to re-establish family relationship foundations broadly across all society.

Negating the tax issues;
There are so many huge misconceptions about marriage floating around these last few years as a result of the marriage ‘equality’ fight.

The simplest loss to this fight is what marriage is to begin with. It is a RELIGIOUS issue. There should be no government debates. There should be no tax subsidies for married persons. There should be no insurance incentives for married persons.

People don’t go out and get married because it is oh so very important for the state to give them permission or recognition. People are married before God and the rest is artificial, legal constructs put into place to affect the behaviors of the population. . . i.e., RELIGIOUS DISCRIMINATION/PREFERENCE/CONTROL

Equality under law cannot, and will not, exist so long as the government subsidizes religious practices.

Connor – your supposition in gay marriage is all wrong. The tax benefits are just an excuse. What gay people really want is absolute, unquestioned unreasoned acceptance. And they’ll use any type of argument, emotional extortion, blatant appeals to emotion or judicial abuse to get it. Your solution wouldn’t change a thing for them.

Customers who shop online are supposed to pay the sales tax directly to the government, but many don’t realize this, so it goes uncollected

Nice circumlocution, there, by whomever wrote that news article. Although I suppose that many people don’t realize that they’re supposed to pay the tax directly, it is stated pretty clearly in the state tax forms in my state (MN), and your tax preparer should mention it. However, the usual response is, “You’ve got to be kidding.”

This is, of course, unenforceable, unless you pass laws like the proposed one you’re looking at here. All that nonsense about “voluntary” tax compliance notwithstanding, no one’s paying that unless they’re forced to.

Trackbacks/Pingbacks

[…] CarbonNYC/Foter.comUtah’s legislature recently considering a bill to implement an online sales tax, which failed earlier this month. Proponents, including brick and mortar stores, lobbied for the bill to “level the playing field” by requiring online sellers to collect the same sales tax stores in the real world do. Author Connor Boyack makes the libertarian case against internet sales taxes and government marriage: […]

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